Israeli intelligence told Australia Zygier was in jail

THE Israeli intelligence services were the first to notify Australian officials that Ben Zygier - dubbed Prisoner X - had been detained for serious offences under the country's security laws, Fairfax Media has learnt.

Mr Zygier, an alleged Mossad agent and dual Australian-Israeli citizen, was incarcerated in solitary confinement in Israel's maximum security Ayalon jail for 10 months before he died in December 2010, reportedly by hanging himself.

Speculation about who knew what, and when, has been rife since the sensational revelation that Prisoner X was Mr Zygier.

Much of the media reporting has said that ASIO not only informed the Australian mission in Tel Aviv of Mr Zygier's detention but had interrogated him before he was detained.

But a well-placed source familiar with the case said Israeli intelligence - understood to be its internal security service, Shin Bet - had in fact tipped off Australian officials first.

And this week Israel's Prime Minister, Benjamin Netanyahu, issued a statement saying ''the late Mr Zygier had no contact with the Australian security services'', a view backed by the Attorney-General, Mark Dreyfus.

''The Israeli Prime Minister has issued a statement noting that Mr Zygier had no contact with Australian security agencies and explaining that there is excellent co-operation, full co-ordination and complete transparency between the government of Israel and the government of Australia,'' his spokeswoman said.

''The Attorney-General has been fully briefed by the Director-General of ASIO on his agency's knowledge of this case. The Director-General's account is entirely consistent with the recent statement issued by the Israeli Prime Minister.''

The positive depiction of relations between the two countries' intelligence services at the time stands in contrast to the public anger of the then prime minister Kevin Rudd that Mossad agents had been using Australian passports, including during the assassination of a Hamas operative in Dubai just before Mr Zygier's arrest.

An Israeli diplomat, believed to be a Mossad agent, was subsequently expelled from Israel's embassy in Canberra.

While Australia's spies may not have contacted Mr Zygier directly, there is evidence he was being monitored.

Fairfax Media's former Middle East correspondent Jason Koutsoukis said he had been tipped off about concerns Mr Zygier may have been facilitating the use of Australian passports by Israel's spies by an ''Australian intelligence source'' in October 2009.

He then interviewed Mr Zygier, who denied the allegation. A week after their last conversation, Mr Zygier was imprisoned.

Unconfirmed media reports in Israel and Australia have suggested that Mr Zygier's interaction with Koutsoukis may have sparked his arrest.

What exactly was known about Mr Zygier within the Department of Foreign Affairs and Trade is now the subject of an investigation.

DFAT first said it had no knowledge of the case until Mr Zygier died. It then corrected the account by saying a single Australian official in Tel Aviv was informed after his arrest. This was later clarified again to say a number of Australian officials were aware of the case before his death.

Mr Zygier's family have declined to comment but there has been criticism that Australian officials were delinquent in monitoring his welfare while he was in prison.

But DFAT has said it received no request from Mr Zygier's family for consular assistance and noted that, because he was a dual national, they had no right to insist on access to him.